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Refreshing Insights

Much as we all might like to kick off 2021 with a clean slate, the effects of the health and economic crises caused by the 2020 COVID-19 pandemic continues and will follow us into the new year and possibly beyond.

As you finalize your strategic plans for 2021, we have identified some of the ongoing compliance developments to watch in the areas of business operations, insurance, human resources and employee benefits. While we can’t predict what risks a new year will bring, we can learn from past experiences and put best practices in place to help mitigate the impacts.

Business Operations and Insurance

Business Continuity
A pandemic on the scale of COVID-19 was largely unexpected, so it left a lot of businesses underprepared to react quickly with a contingency plan. The future will require businesses to be more agile and adapt to rapid shifts in how and where they do business. For example, some restaurants have opted for a continuation of business operations with carry-out only menus, shifting how they serve customers.

Take away: Companies must review their risk management solutions and business continuity strategies to be ready if another crisis like COVID-19 forces a rapid shift in operations.

For business operations in industries with workforces that cannot work remotely, and instead, require close proximity (e.g., manufacturing or assembly work, etc.), the need to address more immediate return-to-work strategies will take priority over future continuity plans.

Insurance Coverage and Vendor Terms
Insurance carriers, brokers and agents continue to work together to understand how the industry must respond to COVID-19 claims and how to move forward with everyone’s best interests in mind. As a result of the pandemic, you are likely to see differences in carrier contracts and terms regarding Force Majeure (i.e., acts of nature or public enemy, etc.) and related coverages.

We are also seeing a hardening of the market with rate increases due to large payouts across the country for fires, floods, damages from civil unrest, etc. In addition, the low interest rates are putting pressure on underwriting investment income, resulting in higher premiums to ensure payouts can be properly made in the event of a claim.

Take Away: Make sure you carefully read your policy language and find a trusted advisor to help you understand it. Choose an advisor who can help you navigate the changing industry and guide you to the best policies for your situation.

Increased Cyber Security
Homeland Security continues to report a surge in cyberattacks amidst COVID-19 as more businesses quickly move to provide remote access to employees and customers. Having more employees working from home—with less direct supervision and uncontrolled internet connections—creates the possibility for more data breaches and possibly even employee fraud.

Take away: Companies will need to have more internal security resources and expenditures. The increased demand for cloud technology alone will translate to additional security technology. Companies should not only invest in appropriate levels of cybersecurity insurance, but also should train employees to identify and stop threats to prevent data breaches.

Human Resources and Employee Benefits

Employee Communication
When is employee communication not a priority, right? But this year with so many expected changes to operations and the multitude of compliance issues related to healthcare and leave benefits, HR professionals should plan for additional efforts around employee communication.

Take Away: Open and clear communication to employees, and between HR and management, is critical to keeping everyone up to speed on evolving changes and potential HR compliance risks. Repeated communication along with frequent and effective training on compliance programs will be key in 2021.

For issues related to COVID-19, many government agencies have provided guides and checklists, as have industry organizations, associations and insurance agencies. You can make use of these materials to provide easy-to-understand resources and recommendations to your leadership team and workforce.

Paid Leave
The Families First Coronavirus Response Act leave requirements are scheduled to sunset at the end of this year. Both the Emergency Paid Sick Leave Act and the Emergency FMLA Expansion Act remain in effect only until December 31, 2020.

Take Away: As Congress looks to create yet another COVID-19 relief package, paid leave issues will require employers to reevaluate their employer-sponsored paid leave programs, including sick, disability, parental and family leave.

Healthcare Benefits
The Affordable Care Act (ACA) rules will continue to play a large part in compliance activities for employer health plans. Continued enforcement of the employer shared-responsibility (ESR) and related reporting rules, updates to the summary of benefits and coverage, and payment of the Patient-Centered Outcomes Research Institute (PCORI) fee will continue as part of ACA compliance.

Additionally, Congress may:

  • Look to subsidize the Consolidated Omnibus Budget and Reconciliation Act (COBRA) to help recently unemployed workers maintain healthcare coverage.
  • Ease restrictions on flex spending plans (including cafeteria plans), allowing carryover balances in health and dependent care by more than the current two-month grace period.
  • Assist employers with reinsurance for certain COVID-19 related costs incurred (e.g., continued COVID-19 testing).
  • Create extensions of emergency paid leaves/programs for workers and parents, and even additional health plan updates.

Take Away: With any relief package, employers should look to additional provisions within the bill(s) to address surprise medical bills, generic drugs to market, price and transparency of drugs and healthcare, increased telehealth and increased mental health.

Key Take Away

As the world and industries change and grow, compliance laws are always evolving. In a standard year, it can sometimes be hard to keep up and review your business risk exposures. But the rapid and reactionary pace of rules in 2020 has left many employers recovering from whiplash and questioning if their current risk management strategies will be adequate for the coming year.

Don’t wonder and worry about your coverage. Consult with our experienced team of strategic risk advisors and feel confident that you are proactively addressing any new requirements and protecting your future. New call-to-action

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A collection of articles from the McClone team with the helpful knowledge and insights to ensure your organization is well protected.